Wednesday, March 14, 2007

Cox and Olson Speak at Chamber Event on US Capital Markets

Against the backdrop of a detailed blue-ribbon panel report urging securities regulation reform, SEC Chair Christopher Cox rejected the call for Congress to amend the Sarbanes-Oxley Act. He said it is wrong to condemn the entire Sarbanes-Oxley Act based on the problems in implementing section 404. He urged people to remember what had occurred before the passage of the Act. Cox sees no need to amend the Act, just the way it was implemented. The Act is only a few years old, he said, and should not be open for amendments. Cox was among the keynote speakers at today’s capital markets summit hosted by the Chamber of Commerce.

The summit also featured keynote addresses by PCAOB Chairman Mark Olson, House and Senate oversight chairs Rep. Barney Frank (D-MA) and Senator Christopher Dodd (D-CT). The Chamber financed the independent bipartisan blue-ribbon panel to present recommendations to improve the U.S. competitive position in the global markets.
Cox joked about the SEC’s uneasy acquaintance with the Chamber, having been the subject of several high profile lawsuits brought by the Chamber.

The SEC chair was criticized in some quarters for appearing at the Chamber event, but said he will not play the stereotype of a deregulatory Republican Congressman. It is not necessary for their interests to be at odds, according to Cox. He cited the words of the SEC’s first chairman, Joseph Kennedy, who said the SEC is the partner of honest business and the prosecutor of dishonesty. He welcomed the opportunity to study the report by the bipartisan panel, and expressed appreciation for the members’ energy and effort

Chairman Olson discussed the PCAOB’s proposal to revise its original standard for the audit of internal controls over financial reporting. About 170 comment letters have been received, he said, many with recommendations to further improve the standard. Olson said the recommendations are being carefully considered. He noted that the larger auditing firms have begun to train their engagement teams based on the proposed standard. He said the proposal will likely evolve somewhat before its final adoption in response to the comments, but believes the early training may result in a smoother transition once the standard is adopted.

Senator Dodd said the commission has presented a thoughtful report and has made an important contribution to the debate. He said the Senate Banking Committee will hold hearings in the coming weeks. There are a number of considerations to keep in mind, according to Dodd. The first is that the U.S. markets remain the most dominant in the world and have done so even in light of the 9/11 attacks, corporate scandals and the war in Iraq.

The U.S. markets remain strong because of the architecture by which they are governed according to Dodd. At the same time, the laws and regulations should not be entrenched. They should be subject to reexamination, in his view. Dodd also noted that American firms are leaders in foreign markets and have helped to shape and guide them. He said market growth overseas should be embraced because it opens new markets for American businesses.